Americans are not enjoying the first few weeks of summer 2008. According to preliminary numbers released today, the University of Michigan’s Index of Consumer Confidence dropped 3.1 points in June to a reading of 56.7, which is the lowest reading since May 1980.
The reasons for such consumer gloom are legion. Home values continue to erode while foreclosures climb to record levels. Food prices are up 5 percent year-over-year, according to government data, making it more expensive to buy groceries or eat out.
“Compounding these vexing issues on the household balance sheet, there continues to be relatively weak employment market conditions, and the persistent upward pressure on crude oil and gasoline prices is several quantum levels worse than Chinese water torture,” said Brian Bethune, chief U.S. economist for Global Insight in Lexington, Mass.
Gas prices have headed into officially expensive territory. The national average price for unleaded gas now stands at $4.066 per gallon, according to the American Automobile Association’s Daily Fuel Gauge Report(http://www.fuelgaugereport.com/). That is more than a dollar-per-gallon higher than a year ago, when Americans paid an average of $3.043 for regular unleaded. (Pity those whose cars specify premium fuel, which now averages $4.471 per gallon nationally.)
It could make for a difficult economic year. “These very low readings for consumer sentiment are generating a distinct impression that there is another heavy shoe to drop on consumer spending in 2008,” Bethune said.
Alison Rice is senior editor, online, at BUILDER magazine.
Learn more about markets featured in this article: Ann Arbor, MI.
